by Imee Charlee C. Delavin, Reporter
The Duterte administration’s push to develop agriculture and areas outside Metro Manila has cast a ray of hope on smaller lenders wanting to regain their footing, if not expand.
Even while campaigning for the Presidency, then Davao City Mayor Rodrigo R. Duterte has capitalized on the disparity in economic development between what he called “Imperial Manila” and the rest of the country, especially the rural areas.
Rural banks have mirrored the countryside’s neglect, with a growing number of the industry’s members driven to bankruptcy. This forced the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) to launch a rescue package that includes tax and other incentives for third-party investors willing to avert closures, if not revive forlorn rural lenders.
Despite two extensions of the program, rural banks continue to fall by the wayside, erasing the little amount depositors had earned on their accounts, if not their trust in banks altogether.
Rural Bankers Association of the Philippines (RBAP) President Antonio O. Pasia said rural banks are hoping to participate in the financial inclusion thrust of the new government.
“We’re hopeful, we definitely would like to participate in the programs of the new administration, we would be offering the rural banks to take part in the countryside development,” said Mr. Pasia, who is also president of Batangas-based Malarayat Rural Bank Inc.
“We think the new administration is more receptive towards the needs of the farmers and fisherfolks that’s why we’re offering the services of the rural banks in those areas,” he said.
Rural banks are front liners in countryside development and in financing the needs of farmers, fisher folks and micro, small and medium enterprises (MSMEs).
These lenders serve as the platform for bigger banks to fulfill their required 25% credit quota to the farming sector, as mandated by the Agri-Agra Reform Credit Act of 2009.
The small lenders could also serve as the platform for small and medium-scale enterprises to secure funding for their business expansions through microfinance.
With stiffer competition in the banking space, rural banks would like to strengthen [their] position in [their] own areas and “hopefully compete in the delivery of credit to the countryside” by merging to build stronger lenders, upgrading technology and forging partnerships, Mr. Pasia said.
“Eventually, there will be lesser number of rural banks because of consolidations and mergers but stronger players. I think for those that will stay on, there future will be better,” he said.